The shares of Rand Logistics, Inc. have decreased by more than -71.80% this year alone. The shares recently went down by -7.51% or -$0.02 and now trades at $0.23. The shares of Gastar Exploration Inc. (NYSE:GST), has slumped by -36.13% year to date as of 12/05/2017. The shares currently trade at $0.99 and have been able to report a change of 19.28% over the past one week.
The stock of Rand Logistics, Inc. and Gastar Exploration Inc. were two of the most active stocks on Tueday. Investors seem to be very interested in what happens to the stocks of these two companies but do investors favor one over the other? We will analyze the growth, profitability, risk, valuation, and insider trends of both companies and see which one investors prefer.
Profitability and Returns
Growth alone cannot be used to see if the company will be valuable. Shareholders will be the losers if a company invest in ventures that aren’t profitable enough to support upbeat growth. In order for us to accurately measure profitability and return, we will be using the EBITDA margin and Return on Investment (ROI), which balances the difference in capital structure. RLOG has an EBITDA margin of 9.17%, this implies that the underlying business of GST is more profitable. The ROI of RLOG is 0.60% while that of GST is -20.40%. These figures suggest that RLOG ventures generate a higher ROI than that of GST.
The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, RLOG’s free cash flow per share is a positive -0, while that of GST is negative -0.03.
Liquidity and Financial Risk
The ability of a company to meet up with its short-term obligations and be able to clear its longer-term debts is measured using Liquidity and leverage ratios. The current ratio for RLOG is 0.10 and that of GST is 1.40. This implies that it is easier for RLOG to cover its immediate obligations over the next 12 months than GST.
RLOG currently trades at a P/B of 5.85, and a P/S of 0.04 while GST trades at a P/S of 2.29. This means that looking at the earnings, book values and sales basis, RLOG is the cheaper one. It is very obvious that earnings are the most important factors to investors, thus analysts are most likely to place their bet on the P/E.
Analyst Price Targets and Opinions
The mistake some people make is that they think a cheap stock has more value to it. In order to know the value of a stock, there is need to compare its current price to its likely trading price in the future. The price of RLOG is currently at a -88.5% to its one-year price target of 2.00. Looking at its rival pricing, GST is at a -1% relative to its price target of 1.00. This figure implies that over the next one year, GST is a better investment.
When looking at the investment recommendation on say a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell), RLOG is given a 2.00 while 2.90 placed for GST. This means that analysts are more bullish on the outlook for GST stocks.
Insider Activity and Investor Sentiment
Short interest or otherwise called the percentage of a stock’s tradable shares currently being shorted is another data that investors use to get a handle on sentiment. The short ratio for RLOG is 0.16 while that of GST is just 19.48. This means that analysts are more bullish on the forecast for RLOG stock.
The stock of Gastar Exploration Inc. defeats that of Rand Logistics, Inc. when the two are compared, with GST taking 6 out of the total factors that were been considered. GST happens to be more profitable, generates a higher ROI, has higher cash flow per share, higher liquidity and has a lower financial risk. When looking at the stock valuation, GST is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for GST is better on when it is viewed on short interest.